Commissioner Of Income Tax v. M/S Jai Bharat Gum & Chemical Ltd

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.510 of 2005 Date of decision: 12.10.2010 Commissioner of Income Tax. Vs. M/s Jai Bharat Gum & Chemical Ltd. -----Appellant. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTALHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. Sanjeev Kaushik, Sr. Standing Counselfor the Revenue.for the Revenue. Mr. Avneesh Jhingan, Advocatefor the Assessee. --- ADARSH KUMAR GOEL, J. 1.This appeal has been preferred by the revenue underSection 260-A of the Income Tax Act, 1961 (for short, “the Act”)against the order dated 21.9.2004 of the Income Tax AppellateTribunal, New Delhi in I.T.A. No.3319/D/01 for the assessmentyear 1997-98 proposing to raise following substantial question oflaw:- “Whether on the facts and in the circumstances of thecase, ld. ITAT was justified in holding that deductionu/s 80 HHC is admissible on the amount ofcompensation of Rs.23,45,599/- received by theassessee from M/s Pepsico India Holding (P) Ltd., inlieu of loss arising from tax payment in the absence ofdisclaimer certificate.” 2. The assessee derived income from manufacture,trading, and export of guar gum. It claimed exemption underSection 80 HHC of the Act in respect of amount received fromM/s Pepsico India Holding (P) Ltd., as compensation for non-issue of disclaimer certificate. The Assessing Officer did notallow the said exemption on the ground that such income was notcovered under Section 80 HHC of the Act. On appeal, the CIT(A)held that the said income will fall under Section 80 HHC of theAct, as it does not fall under Section 28 (iiia), (iiib) or (iiic) of theAct. Appeal of the revenue against the said order of CIT(A) wasdismissed with the following observations:- “5.The compensation received by the assesseedoes not fall within any of the category as mentionedin sec.80 HHC(4B) explanation (baa)(1). It is not apayment of any sum referred to in sec.28 ((iiia), (iiib),(iiic) of the Act. It is also not in the nature ofbrokerage, commission, interest, rent, charges or anyother receipts of a similar nature included in suchprofits......” 3. We have heard learned counsel for the parties andperused the record. 4. Learned counsel for the revenue submits that merefact that the amount received by the assessee did not fall underClauses (iiia), (iiib) or (iiic) of Section 28, was not enoughto attract Section 80 HHC of the Act. Section 80 HHC of the Actwas not attracted to every business income but only to income derived from export, as specified in the said Section. The amountreceived by the assessee was not shown to be covered bySection 80 HHC of the Act as the same was not from export asrequired therein. The view taken by the CIT(A) and the Tribunalthat the claim will be covered by the said section only on theground that the income of the assessee was outside Section 28(iiia), (iiib), (iiic) of the Act, was not borne out by either Section 80HHC itself or any other principle. Any exemption has tospecifically fall within four corners of the provision and burden ofshowing that it so falls, is on the assessee. 5. Learned counsel for the assessee has not been ableto show how the compensation received by it will fall underSection 80 HHC of the Act. He only submits that the said incomewas a business income. Mere fact that the assessee derivedbusiness income not falling under Section 80 HHC(4B)explanation (baa)(1), which refers to income covered underSection 28(iiia), (iiib), (iiic) of the Act, is not enough to attractSection 80 HHC of the Act. 7. Accordingly, the question of law raised by the revenuehas to be answered in its favour and against the assessee. Theappeal is allowed. (ADARSH KUMAR GOEL) JUDGE October 12, 2010ashwani ( AJAY KUMAR MITTAL ) JUDGE